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News from the "Stent Wars" front or how to lose a marketing war

Dr. Eugenia Jones signing in for this month’s look at technology marketing and bio-engineered technology innovation for the technology marketing center.

It's been a while since I have provided a post and in the meantime a good deal has happened in the medical device world. Last August I blogged about the notorious "stent wars"; encouraging everyone to keep on eye on who would lose or gain market share. In June, Cordis, a Johnson & Johnson subsidiary, the first company to market a DES (drug eluting stent) and one time market leader, announced it has stopped all development of its next-generation DES, and will quit selling Cypher, its current DES product by the end of the year. So what drove J&J to raise the white flag and quit the $6 billion dollar DES market?

1) R&D development issues. Cordis has twice delayed launch of the next-gen DES product, while the main competitors, Boston Scientific and Abbott, have had a steady release of new or improved products into the market. This failure to launch new products has further eroded market share, and leaves the impression amongst buyer that the company lacks the expertise necessary to drive innovation. 

2) Legal losses. Cordis lost a $428M intellectual property infringement suit around DES technology brought by Bruce Saffran in Jan. 2011, and a $19M IP suit in May, 2011 to Boston Scientific.  

3) Manufacturing issues. Regulators sent a warning letter to Cordis regarding DES manufacturing consistency issues at their San Germino, Puerto Rico site.

4) Revenue dropped to a mere $400M in 2010, which was ~1% of the divisions gross revenue and the company was continuing to lose market share with a CAGR -15% in a growing market.

There is a moment, a tipping point, when a product gains traction in a community. I believe there is also a dipping point, a moment when a product slides out of favor with a community. Once a product has slid under the dipping point sales are achieved through the products loyalists or to the completely price sensitive by offering deep discounts.

J&J's Cordis will restructure, writing off another $600M, eliminating approximately 1,000 jobs in Ireland and Puerto Rico, and will turn their attention to other products and markets where their positioning and solutions better fit with customer needs.

So who won the "Stent Wars"? No one really, there is one less competitor, but there are still two major market share holders, Boston Science and Abbott, and other significant share holders like Medtronics. Boston Science looks to be in good shape, having settled their IP issues with Bruce Saffran in 2009, and having launched continual improvements every 12-18 months.

On the other hand,  Abbott has yet to resolve their infringement case with Bruce Saffran and although that may signal some troubles ahead . Abbott has launched a game changing bio-resorbable DES product that received EU approval in January of this year and is likely to receive FDA clearance in 2015. This product will keep patients vessels open, while releasing drug at the sight where it is needed, and then, over time the stent will be absorbed into the vessel walls, allowing the vessels to remain open and yet retain their flexibility. It is the introduction of a solution with a new "ility" (see Chris post from June) that will likely increase Abbott's share in this market.  

I don't admire J&J for finding themselves in the position they were in, but I do credit them knowing when they hit the dipping point and getting out of the market. I look forward to seeing what new products J&J will be introducing into the larger cardiovascular market. I am also watching Abbott to see if they can leverage their solution drivers to gain the top spot in the DES market. 

Until next time. 



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